US Economic Indicators

The latest grab bag of US economic indicators suggests that the US economy continues to muddle along in its soft patch. The most upbeat data are personal income tax receipts, which totaled $1,054.0 billion over the past 12 months through May. That’s the best reading since March 2009, and up 24.5% from the most recent cyclical low of $846.8 billion. Less encouraging is that despite the cut in payroll taxes on individual paychecks at the beginning of the year, inflation-adjusted retail sales have stalled recently. Over the past 12 months through May, total payroll taxes paid by employees and employers fell to $834.2 billion from $860.0 billion at the end of last year.

Yet, inflation-adjusted retail sales flattened out during April and May. The three-month average of these sales through May fell 2.1% over the past three months, on a seasonally adjusted annual rate basis. That suggests that real consumer spending on goods could be a big drag on real GDP growth during the second quarter. Part of the problem is the shortage of Japanese cars and car parts, which should be resolved later this summer, setting the stage for a rebound in consumer spending on cars.